2014 (2) TMI 665 - AT - Service Tax

Waiver of pre-deposit of Service Tax - Availment of CENVAT Credit of the Service Tax paid - Management Consultancy Services - Classification of service - Whether service be classified under Business Auxiliary Services - Held that - invoice raised by M/s The Indian Hotels Company Ltd specifically states that the service tax category would be Section 65(105)(r) of Finance Act, 1994, and service would fall under Management Consultancy service. Be that as it may, we find from the Para 24 of the Order-in-Original that the adjudicating authority has proceeded on the ground that M/s The Indian Hotels Company Ltd should not have classified the services under Management or Business Consultancy service and should have discharged Service Tax liability under Business Auxiliary Service - appellant has made out a strong prima facie case in their favour - Stay granted.

Summary

Issues:
Waiver of pre-deposit of Service Tax, utilization of CENVAT Credit for exempted and dutiable services, classification of services under Management Consultancy Services and Business Auxiliary Services, authority to contest service classification, applicability of Stay Orders, out of turn hearing request.

Analysis:
The Stay Petition was filed seeking waiver of pre-deposit of Service Tax totaling Rs.25,99,849/- and Rs.2,25,80,531/- along with interest and penalties under Sections 76 & 78 of the Finance Act, 1994. The adjudicating authority confirmed these amounts due to the appellant's utilization of CENVAT Credit for both exempted and dutiable services. The core issue revolved around the classification of services provided by M/s The Indian Hotels Company Ltd as either Management Consultancy Services or Business Auxiliary Services, impacting the eligibility for availing 100% credit. The appellant argued that the service provider's classification should be final and that the Revenue authorities at the recipient's end cannot challenge it. The appellant also highlighted similar Stay Orders by a co-ordinate Bench in a related case.

The Additional Commissioner contended that apart from Management Consultancy services, the appellant utilized various other services for both exempted and dutiable purposes. However, upon reviewing the records, it was noted that the invoices from M/s The Indian Hotels Company Ltd clearly categorized the services under Management Consultancy Services. Despite this, the adjudicating authority insisted that the services should have been classified under Business Auxiliary Services for taxation. The Tribunal agreed with the appellant's argument that the recipient's Revenue authorities cannot dispute the service provider's classification. The Tribunal found merit in the appellant's case, particularly considering the precedent set by the co-ordinate Bench's unconditional Stay Orders on the same issue.

Consequently, the Tribunal granted the application for waiver of pre-deposit and stayed the recovery until the appeal's disposal. Additionally, due to the substantial amount involved, both parties requested an out of turn hearing, which the Tribunal accepted, scheduling the appeal for disposal on a specified date.